WestJet aims for turn­around

St. Thomas Times-Journal - - SPORTS - CHRISTO­PHER REYNOLDS

TORONTO — WestJet Air­lines Ltd. aims to lift its lag­ging prof­its over the next four years, pre­dict­ing earn­ings growth of 40 per cent on a per share ba­sis be­tween 2019 and 2022 af­ter a tur­bu­lent year that saw prof­its plunge.

Soar­ing fuel costs, labour un­rest, and steep com­pe­ti­tion at home and abroad caused Canada’s sec­ond-largest air­line to in­cur its first loss in 13 years dur­ing the sec­ond quar­ter, fol­lowed by a steep year-over-year drop in the third quar­ter — which nonethe­less bounced back into the black.

Rev­enues and ef­fi­ciency were “nowhere near” the air­line’s po­ten­tial, chief ex­ec­u­tive Ed Sims said at a WestJet in­vestor con­fer­ence in Toronto Tues­day.

Strong de­mand, more branded fares and higher an­cil­lary fees will boost its rev­enue per avail­able seat mile to be­tween two per cent and four per cent in 2019, Sims said.

Branded fares bun­dle var­i­ous perks — such as pre-re­served seats and bag­gage checks — at a higher to­tal price.

Ear­lier this year, the air­line launched transat­lantic ser­vice on the first three of an ex­pected 10 Boe­ing 787 Dream­liner air­craft in a bid for busi­ness pas­sen­gers that chal­lenges Air Canada’s transat­lantic dom­i­nance.

A crowded do­mes­tic mar­ket re­sulted in “over-sup­ply” and weaker rev­enue per avail­able seat mile — a key in­dus­try met­ric that di­vides op­er­at­ing in­come by pas­sen­ger car­ry­ing ca­pac­ity.

A freshly ex­panded Flair Air­lines, soonto-launch Canada Jet­lines Ltd., and Air Canada’s low-cost Rouge are all crowd­ing the bud­get airspace that WestJet has flown into with its four-month-old, ul­tralow-cost Swoop.

The mar­ket sat­u­ra­tion means WestJet will “step back from prof­it­less vol­ume,” Sims said.

The air­line aims to grow pas­sen­ger ca­pac­ity by be­tween 6.5 per cent and 8.5 per cent next year, mainly through three Dream­lin­ers em­bark­ing on non-stop ser­vice from Cal­gary to Dublin, Paris and Lon­don’s Gatwick Air­port this spring.

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.